A. SREENIVASA REDDY (ABU DHABI)
Fitch Ratings expects Islamic syndicated financing in the UAE to gain further momentum through the rest of 2026 as many issuers have largely avoided public US dollar sukuk and bonds since March due to recent regional developments.
“Syndications, including Islamic, are increasingly prominent in the funding mix, driven by their private nature, lower requirements, and accommodating UAE banking system,” Bashar Al Natoor, Fitch Ratings’ Global Head of Islamic Finance, told Aletihad.
Islamic syndications over the longer term will be shaped by post-war market sentiment, access, and funding requirements, Al Natoor added.
Islamic syndications issued in the UAE exceeded $9 billion in Q1 2026, up nearly 240% year-on-year (YoY) but down over 35% quarter on quarter (QoQ), Fitch Ratings said.
According to Al Natoor, outstanding Islamic syndications in the UAE reached about $67 billion at the end of Q1 2026, up about 29% YoY. Reported Islamic syndications accounted for almost 37.5% of total syndications outstanding in the UAE at the end of Q1 2026.
Total reported syndications issued in the UAE reached about $17 billion at the end of Q1 2026, with Islamic finance accounting for around 52%, underscoring the growing role of Shariah-compliant funding in the country’s financial system. Total reported outstanding syndications in the UAE surpassed $175 billion at the end of Q1 2026, with Islamic finance comprising about 37%, Fitch said.
In the UAE, key Islamic syndicated financing deals in Q1 2026 included a $500 million club commodity murabaha term facility by Emirates Islamic Bank and long-term revolving credit facilities by Dubai Aerospace Enterprise, which featured $500 million in Shariah-compliant liquidity. In addition, Emirates Global Aluminium secured a $5 billion multi-tranche debt financing that included Shariah-compliant facilities.
Beyond the UAE, the broader Islamic syndication market across core economies has also seen strong growth, reflecting a structural shift in funding preferences. According to Fitch, Islamic syndication issuance in core markets — including the GCC, Egypt, Indonesia, Malaysia, Turkiye and Pakistan — reached $23 billion in Q1 2026, marking a sharp 294% increase YoY, although it declined 18% from the previous quarter.
At the same time, conventional syndicated financing in these markets fell by around 27% YoY and 50% QoQ to $32 billion, indicating a relative shift towards Islamic structures. Dollar sukuk issuance in core markets stood at about $20 billion in Q1 2026, down 9% QoQ but still higher on an annual basis.
Globally, outstanding Islamic syndicated financing rose by more than 26% YoY to reach approximately $219 billion at the end of Q1 2026, with the bulk concentrated in Saudi Arabia, the UAE and Egypt.
The UAE alone accounted for about 32% of global Islamic syndicated financing outstanding, second only to Saudi Arabia at 38%, highlighting the country’s central role in the Islamic finance ecosystem.
Islamic syndications also gained share within the GCC, accounting for roughly half of total syndication issuance in Q1 2026, compared to 35% in 2025, as issuers increasingly favour private and flexible funding channels during periods of market uncertainty.
Fitch noted that Islamic syndications continue to serve as a key funding tool for large-scale sectors such as infrastructure, energy, utilities, financial institutions and sovereign-related entities, often structured alongside conventional tranches to diversify investor participation.
The resilience of Islamic financial institutions has also supported this growth. About 65% of Fitch-rated Islamic banks and multilateral institutions globally are investment-grade, with most maintaining stable outlooks and strong liquidity and capital buffers heading into the current geopolitical environment.
Looking ahead, standardisation efforts — including work on syndicated murabaha and ijarah structures — are expected to further support market expansion by improving efficiency and reducing transaction costs, Fitch said.